Research published this week by Shoppercentric reveals that customers rate quality and service over price as critical factors in determining where to shop.
In the same week, Aldi reach new highs in market share overtaking Co-op into 5th position in the UK grocery market.
Aldi and Lidl were in the right place at the right time, with discount prices on everyday grocery items. Price was critical at the height of the economic crisis and those prices were hard to ignore. Asda held their position well in those early days also benefiting from their price positioning.
In today’s market however quality and service are taking a lead. And Asda’s market share is still dropping.
Aldi have found a sweet spot
Prices are low, quality messages and premium products are evident and have traction and customer service is acceptable. What Aldi lack in time at the till, they make up for in friendliness and well stocked shelves with staff on hand and willing to point you towards your desired produce.
Asda have relied too heavily on price and haven’t been keeping pace with customer’s need for quality and service.
In the same Shoppercentric research, convenience stores saw the biggest gains (47% of shoppers used them in the past month – an increase of 4% on 2016) compared to supermarkets. Asda are in need of a convenience format if they are to regain lost market share. It is highly unlikely that they will launch a new format directly, but it has been mooted that they might buy a facia to occupy that space.
Asda can buy into the convenience sector can they buy quality and service?
Service can be addressed. Our productivity model has saved retailers millions of pounds already that has been re-invested into the business to support customer service and operations. It allocates resource appropriately across stores and schedules labour hours to maximise efficiency at store and department level. In store availability is improved, customer service is optimised and margins are supported through cost reduction.
What productivity modelling can’t do on its own is change organisation culture and quality perception. If there isn’t a customer service culture, change must come from the top and quality perception can come through marketing and an adjustment in key messages.
Aldi operates a model that Asda can learn from. Asda has brand equity that can be leveraged and together with operational effectiveness can deliver the growth that has been lacking. Naturally there is the temptation to look forward and guess how close Aldi could get to Asda’s market share. Closer than it is now is a certainty, but how close depends on Asda.